Best-performing sector? Homebuilders
A fund that tracks U.S. homebuilder stocks is seeing great returns. But can it keep that momentum?
The iShares Dow Jones U.S. Home Construction Index Fund (ITB) has a year-to-date return of 10.5%, according to The Wall Street Journal. It's the most successful ETF that doesn't use leverage.
But before you plow any money into ITB, consider that it's more than twice as volatile as the S&P 500 index. The housing sector that the fund focuses on is highly cyclical and sensitive to economic and credit conditions, wrote one Morningstar analyst.
The $330 million ITB has 70% in home builders, according to the Journal. It made a big bet on Lennar (LEN), which has jumped more than 30% this year.
Will ITB be able to keep its momentum? Life isn't getting any easier for the home building industry. High unemployment and foreclosures continue, the Morningstar analyst said.
The government is slowly cutting back on aid to homeowners. It's ending a program to buy mortgage-backed securities, which will likely push up mortgage rates, according to the Journal.
Furthermore, the first-time homebuyer tax credit is set to expire, and the Federal Housing Administration is tightening up its lending guidelines.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
Do it once a year. This allows the best-performing asset classes to take off and run.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.